Incomes zoom, but jobs stagnate in informal sector

About a quarter of India’s labour force, some 11 crore people, work in non-farm enterprises that can broadly be described as the unorganised sector. Of these 6.3 crore enterprises, none are covered under the Companies Act or Factories Act. In fact, more than two thirds are unregistered.

These are not some fly by night vendors — 82% operate from homes or permanent structures outside homes, 98% are open through the year.

Put together they add Rs 11.5 lakh crore to the country’s output.

These are some of the findings of a survey of nearly three lakh enterprises done by NSSO in 2015-16. Only non-agricultural enterprises were covered and construction based units were also excluded. Since 2010-11, when a similar survey was done, the number of enterprises has increased by 57 lakh or 10% but strikingly, the number of workers has increased by only 33 lakh or 3% in these five years.

That’s a net addition of about 6.5 lakh workers every year. This reflects the stagnating employment scenario in the country. Meanwhile, the gross value added has increased by 83% in this period.

Another notable aspect is that earnings of workers have increased by 86% in five years, even as employment has stagnated. An average worker in these enterprises earns over Rs 7,000 per month, compared to nearly Rs 4,000 five years ago. Since gross value added per worker has jumped up by 78%, this means that workers are working more and earning more.

These enterprises, otherwise classified as micro-, small-, cottage etc., were thought of by many as a great hope for providing mass employment and efficient resource utilization, but they don’t seem to be in great health, going by this report.